How to fund a MVNO
Raising funding for any early stage business is always challenging; particularly if the business requires substantial investment before it generates revenues let alone profits. Raising funding for a Mobile Virtual Network Operator (MVNO) has all of these challenges however it is made more difficult due to the fact that a MVNO is a service business; typically with few tangible assets.
Get is right and the rewards for investors are tremendous (e.g. VirginMobile or ToucanMobile) however get it wrong and often there’s little to show for multi-millions of investment (e.g. AMP’d). Ironically, these greed and fear characteristics make MVNO’s attractive investment opportunities for financial institutions.
Investors often prefer investments with significant intellectual property or other tangible assets rather than service businesses; however this overlooks the fact that a well structured and operated MVNO has many valuable assets beyond a simple revenue stream. Beyond the obvious customer revenue streams and goodwill, there are assets such as a number range, interconnects, a brand and associated propositions and last but by no means least the actual MVNO agreement itself.
In this context raising finances for a MVNO venture, in Piran Partners’ experience, is a complex task. The starting point is a well prepared and thoroughly customer proposition, however good the actual business plan the customer proposition and associated economics are critical. Experienced third parties MVNO consultants can add immense value to this process, but choose carefully, an ideal third party should be an industry practitioner rather than a generic consultant.
In many instances potential investors seek the opinion of experienced third parties when considering an investment; once again the insight of an active industry practitioner can help direct the investor towards those MVNO with the potential for generating tremendous returns. Often investors refer to this process as due diligence.
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Key words: Funding a MVNO, MVNO funding.
